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Chapter 8 Marketing.docx

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MKT 100

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Chapter 8 Marketing Product: Anything that is of value to a consumer and can be offered through a marketing exchange. Includes: goods, services, places, ideas, organizations, people, and communities. The first P in the marketing mix. Why do firms create new products? - provide value to firms and customers – how much value? Depends on how new they really are - Innovation: The process by which ideas are transformed into new products and services that will help firms grow; without innovation, firms could only market the same product to the same customers or to another market with similar customers Changing Customer Needs - new products satisfy the changing needs of current and new customers so they do not get bored of the current product - eg Dove just sold soap, but than expanded to other products to keep customers interested in the brand - sometimes firms create products that customers never knew they needed, eg toothpaste - or make take a product and adjust it to make it more interesting/better Market Saturation - eg sneakers or cars – companies don't offer the same models every year because people wouldn't buy the same if the one they have now works fine – so they change and upgrade frequently Managing Risk through Diversity - the more kind of special k eg, the better if can achieve results Fashion Cycles - industries that rely on fashion trends and experience short product life – eg apparel, books, arts, , movies, software – most sales come from new products - you wouldn't buy more books if the same are available all the time Innovation and Value - Pioneers/Breakthroughs: New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market, eg new-to-world-products - They require a higher level of learning from consumers and a lot more benefits – eg the internet - Pioneers are first movers: the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead; eg sony Walkman and than apple ipod - Not all pioneers succed- often times imitators learn from the pioneers weakness and gain advantage in the market; also they spend more time promoting the product versus the actual brand – making it easier for followers; it is often more expensive and has a less nice design because it was the first - Most new products fail because: not enough benefits for the customer, too complex, bad timing - new-to-the-world products are not adopted by everyone at the same time. Rather, they diffuse or spread through a population in a process known as diffusion or adoption of innovation Adoption of Innovation - Diffusion of Innovation: The process by which the use of an innovation, whether a product or a service, spreads throughout a market group over time and over various categories of adopters; - helps marketers understand the rate at which consumers are likely to adopt a new product or service - helps identify potential markets for their new products or services and predict their potential sales - Purchasers can be divided into five groups according to how soon they buy the product after it has been introduced Innovators: Those buyers who want to be the first to have the new product or service; enjoy taking risks, are regarded as highly knowledgeable, and are not price sensitive. Early Adopters: The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don't like to take as much risk as innovators; act as opinion leaders who spread the word to the next big groups Early Majority: A group of consumers in the diffusion of innovation model that represents approximately 34 percent of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out. Late Majority: The last group of buyers to enter a new product market; the product has achieved its full market potential Laggards: Consumers who like to avoid change and rely on traditional products until they are no longer available.  and than there are people who simply do not buy the product (not part of the bell curve) Using the Adop
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